Impersonation!

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How serious do you take impersonation?When you realise that someone is impersonating you and thesame person is challenging your identity,what do you do?Do you get punished or pay for any damages this person is doing to your name or your credit limit?I am asking this question because there are series of cases like this in a particular country,whereby people had been forced to pay back the credit the never took or the things they never did.What is the place for the law in such situation?Any compensation and who pays if there is?